Cisco-Starent: An Internet Giant Wishes Upon a Wireless STAR

What? You have never heard of Starent Networks, the technology company based in Tewksbury, Mass., a small town northwest of Boston.

It may not be a household name, but Starent must have something Cisco Systems badly wants since the Internet giant was willing to pay 50 times Starent’s expected 2009 earnings to acquire the company. Consider also that the $2.9 billion, or $35 a share, price tag is about three times Starent’s market value when the company went public only two years ago.

Starent provides technology that facilitates the transfer of data from the Internet to mobile devices, like smart phones. It is known as a gateway or switching center for date.

Starent doesn’t supply technology to AT&T for its I-Phone service, but it does service Verizon Communications Inc. and Vodafone Group Inc. (And who knows. Complaints about I-Phone internet service could provide another opportunity for Starent in the near future. Although in a blow to Starent, AT&T has recently narrowed the field for its 4G partners to Nokia-Siemens and Ericsson, according to JMP Securities)

Starent provides two main functions for wireless carriers. It makes sure that your Internet session on your smart phone doesn’t cut out as you are driving and switching from one base station to another and it helps authenticate users as they tap into the Internet wirelesses.

Starent is the only platform that serves both 3G, or third generation, and the nascent 4G wireless platforms. The Cisco-Starent deal isn’t quite a Hail Mary pass, as some have called recent high-price deals such as Dell’s $3.9 billion bid for Perot Systems and Xerox’s $6.4 billion…..